If you ever looked for a job, you most likely came across outsourcing companies. They help companies hire workers by charging a fixed fee. Moreover, the employees themselves do not need to make any cash payments. Along with outsourcing, there is the concept of outstaffing. They are similar, but not synonymous. You can read about the difference between outsourcing and outstaffing, and the pros and cons of these areas, in this article.
Outsourcing History
The term "outsourcing" appeared from the English expression outside resource using, which translates as "use of external resources." The profession of a recruiter appeared in the 19th century, just then, of course, no one called it that. The first outsourcers can be considered people who hired sailors for long voyages. They searched for staff, agreed on wages and received their percentage of revenue. Peter I can also be called a kind of recruiter, because he attracted hundreds of personnel from abroad for the construction of St. Petersburg, among whom were engineers, architects, teachers, and nobles.
In the 19th century, hiring security guards, home staff, accountants and stenographers began to gain popularity in Britain and some other European countries. Outsourcing began to grow rapidly in the 20th century. One of the key figures is the company General Motors, which received a powerful impetus for development precisely thanks to the involvement of qualified personnel. In the 1950s, the first highly specialized companies began to appear in the United States that were engaged in the search and hiring of personnel for a specific area. For example, an IT outsourcing company or a company for hiring accountants for small industries. Such services have become very popular because they helped to save the budget by not hiring full-time employees. Outsourcing came to Russia quite late: already in 1990. The first agencies had limited capabilities, but gradually employers realized the full benefits of outsourcing employees. At present, many business structures and government organizations use outsourcing technologies.
What is outsourcing?
Outsourcing was not in vain popular several centuries ago. It is based on the idea of separating individual business processes and delegating part of the tasks to third-party companies. The division of labor is very effective, and not only for large organizations. Studies have shown that when an employee works in multitasking mode, his ability to work is reduced, and the quality of task performance suffers. The transfer of part of the duties to a professional has a positive effect on the speed of work and the result. More than 84% of company owners are satisfied with the outsourcing services provided. Among other things, the concept of outsourcing helps to improve the quality of the product. Thus, the involvement of personnel "from the outside" has an impact on three parties:
- Production or service time.
- Cost of goods.
- Quality.
There is a certain classification of outsourcing companies by industry and production. As a rule, one company specializes in only one direction. What industry-specific recruitment companies can I find?
- Construction.
- IT.
- Accounting.
- Financial.
- Legal
These are the most popular areas in the modern world.Attracting qualified personnel on their own can be quite difficult, so companies often use the help of outsourcing firms. The benefits of this practice are obvious: for example, in America, where recruitment has been flourishing for decades, labor efficiency is several times higher than in Russia.
Outstaffing
Management development dictates ever new criteria for optimizing business processes. One of these technologies is staff outstaffing, which helps reduce production costs. Many people confuse it with outsourcing. But there are differences between outsourcing and outstaffing, despite the similar sounding of the terms. What is outstaffing? This is a kind of “loan” of personnel from another organization that has the necessary personnel. This is indicated by the origin of the word: out - “outside” and English. staff - "staff". The company-employer does not conclude a contract with another company, but with employees who are transferred to his temporary disposal. At the same time, they conclude an interim agreement, which prescribes a list of works that they undertake to perform. That is, formally, employees are registered with one company, and perform the tasks of another.
Outstaffing is usually a temporary measure, which is required under different circumstances:
- For maternity leave or hospital staff member.
- For short-term projects.
- To perform work with harmful working conditions.
The concept of outsourcing and outstaffing helps you choose the right way to attract staff. Outstaffing gives employers unlimited freedom of action. They are not obliged to do tax deductions and paperwork - this is usually the responsibility of the company that provides the personnel. Also, the employer may at any time refuse the services of such an employee, without explaining the reasons for dismissal and without paying a penalty. Therefore, in 2016, the Labor Code was amended by 53.1, which limits staff outstaffing. Now, temporary staff should work at the company for at least 9 months.
Functions
In order to answer the question of how outsourcing differs from outstaffing, you must first understand what functions they perform. Outsourcing, like outstaffing, can take on any functions of the enterprise. The most common are the following tasks:
- Payroll, taxes, accounting reports.
- Software development.
- Cleaning of private apartments, offices, buildings.
- Construction work: construction and repair of buildings and complexes.
- Ground and air transport services (airports, railways).
- Legal support of transactions and company activities.
- Advertising companies, development and promotion of new products.
- HR management, cost optimization.
For any function or task that you need to solve, there is a specialist who will do this in the shortest possible time and with a high result. That is why there are outsourcing companies. They allow not to hire permanent staff, but from time to time to look for professionals for the necessary purposes.
What is the difference between outsourcing and outstaffing?
Outstaffing is often confused with outsourcing. Meanwhile, these are completely different services. They have legal, legal and functional differences. Outstaffing companies provide their personnel to third parties for a period of 9 months or more. A feature of this form of staff selection is that legally employees remain registered with an outstaffer company. They are connected with the customer by a temporary agreement, according to which the company is obliged to pay the agreed amount after the completion of work. The main point of outsourcing is to transfer part of the business processes to a third-party company, and this is the main difference between outsourcing and outstaffing.
But there are other differences.An employee of an outsourcing company, as a rule, receives a job, a salary, and a number of job descriptions. In fact, he differs from a full-time employee only in that he is hired for a short period of time. If the specialist was attracted by an outsourcing company, then his schedule is usually not standardized, he is only required to complete the tasks. Having studied these features, you can get an idea of how outsourcing differs from outstaffing. It should be noted that both forms in Russia are still poorly developed at the legislative level, so fraudsters are often found among outsourcers.
Similarity
If everything is clear with the differences, the similarities between outstaffing and outsourcing are even more obvious. Both those and other firms use their reserves for the following tasks:
- Minimization of risks.
- Improving product quality and company performance.
- Lower financial costs.
- Tax optimization.
- Acceleration of production processes.
Despite the differences between outsourcing and outstaffing, both directions are designed to save the company money at the biggest point of expenses: pay for staff.
Benefits
Outsourcing has become quite popular lately, and many companies are thinking about using the services of hiring companies. What are the benefits of outsourcing and outstaffing?
- Saving money and time is one of the most significant reasons for outsourcing. Often, small companies accumulate a lot of specific work, which requires certain knowledge and skills. For lack of a better alternative, it is blamed on company employees who do not have such experience. The result is poor, performance drops. In this case, attracting temporary professionals can be a good way out.
- Freer contractual relations make it possible to terminate the contract in accordance with the procedure established by law. With regard to the involvement of personnel "from the outside" there are still significant concessions.
- Outsourcing can prevent many unpleasant situations. For example, in the case of dismissal, maternity leave or leaving the employee on sick leave, the company will simply offer another professional. Also, an agreement with an outstaffing company can save you from labor disputes and reports before the tax.
- You can be sure that the tasks will be completed on time. An outsourcing company is interested in the high quality of its services, so employees perform work efficiently and on time.
disadvantages
Outsourcing and outstaffing has certain disadvantages that are associated with the features of these areas.
- An incorrectly completed task is the result of not so much negligence of employees as an incorrectly assigned task. Therefore, when setting goals, it is important how to draw up the terms of reference in more detail.
- Bankruptcy of an outstaffing company may lead to default.
- By transferring part of the tasks to external employees, you risk the confidentiality of the company. Of course, the clause on non-disclosure will be spelled out in the contract, but this does not exclude the possibility of industrial espionage.
Staff leasing
In addition to outsourcing and outstaffing, there is staff leasing, which is the hiring of seasonal workers. On one side of the leasing are recruitment agencies that seek and provide the necessary personnel. And on the other hand, there are enterprises that need temporary personnel. For example, for seasonal cleaning of the territory or repair of the premises. The difference between leasing and outstaffing is that in the latter case, the staff provides another, non-core organization. And leasing, as a rule, is done by professional recruitment agencies.
Outstaffing and outsourcing agreement
The difference between outsourcing and outstaffing is not only in the forms of attracting staff, but also in the contract. The application for outsourcing services displays the following parameters:
- The nature and scope of work.
- Payment.
- The number of employees recruited from outside.
- The result of their activities.
- Preservation of confidentiality.
During the conclusion of the contract for outstaffing services, the employer carefully paints:
- The number of employees involved.
- Remuneration of labor.
- Additional legal agreements with temporary staff.
Thus, the main difference between outsourcing and outstaffing agreements is that a full agreement is concluded with outsourcing services, and only an agreement on the provision of personnel is valid during outstaffing. But even for this, the recruiter must meet certain criteria provided for by Article 56 of the Labor Code of the Russian Federation. The difference between outsourcing and outstaffing is clearly visible at the legal level, so these concepts are incorrect to compare with each other.
Employee Reviews
Outsourcing companies annually help hundreds of employees find work. Having examined in detail how outsourcing differs from outstaffing, it is impossible not to highlight the reviews of the employees themselves, who are familiar with the entire structure from the inside. What are they talking about? Not all employees are satisfied with how their relations with employers are developing. Many complain about defaults, fraud by outsourcing companies. Therefore, when choosing an agency, it is better to carefully study the reviews about its work.
Summary
Outsourcing and outstaffing are different directions that set themselves the same task of reducing costs and improving production efficiency. Both methods have their own characteristics, which should be considered before concluding a contract of a certain type. The difference between outsourcing and outstaffing is in the form of staff recruitment, work schedules, contracts and some other aspects.